This writer fancies himself a burgeoning authority on the nitty gritty of economics. Maybe a bit more emphasis should be placed on the burgeoning bit. As such it strikes me that people are grossly misunderstanding the economic problems of our time when they say things like “economic inequality is too high” because it misses two fundamental points, namely what inequality actually is, and what attempts to fix it are likely to arrive at. In this series of articles I will be sharing excerpts from conversations – some productive, some not so much – that I’ve engaged in on other websites, usually with people who disagree vociferously with any Libertarian world view.

I kicked things off in perhaps suboptimal fashion by sticking my oar into the comments on a video of Noam Chomsky talking about definitions of socialism and trying to suggest that the USSR was not socialist. I took part in two ways, first by talking down the oft-rolled out argument by present-day socialists that the USSR was in fact ‘state capitalist’.

To those describing the USSR as state capitalist ( this is the official line of the Socialist Party of Great Britain ) just no. If the state replaces the entrepreneurial process then it has undone one of the three pillar of capitalism, entrepreneurship. If the state owns all of the capital goods and land, and is the sole employer, then market competition for profit, another pillar of capitalism, is gone. If the state controls investment and money-lending, or bans either of both of them, then the twin capitalist pillars of investment and lending are disposed of as well.

Thus everything that creates capitalism is gone, so no, there’s no basis on which to call the USSR state capitalist. Brazil and France today are mildly state capitalist, Argentina far more so, and Venezuela is mixed state capitalist and socialist, depending what sector you look at, and just check out those delightful lines of people waiting for everything in V-land! Not a model to mimic I suspect.

Thus the USSR, being a state-abrogated and broken society, was entirely socialist and took socialism to its logical conclusion. Sorry if that’s offensive, but even minus the oppressions of state socialism, if a totally democratic, open-source socialism arose it would still be subject to the ‘knowledge’ and ‘economic calculation’ problems, which would permanently impair sound resource allocation.

Thus socialism offers no solution to life’s great, long term problems at all; how to create universal affluence, how to get to space, how to last forever…

Socialism answers none of those; totally free market capitalism does.

A lot of ‘thus’ in there. But the point holds true. I was foolish enough to dip into an existing thread as well, on te subject of economic inequality. I presumed to point out a fairly simple reality about inequality.

Economic inequality is a non issue to the point of being a non-sequitur. Absolute purchasing power is what actually matters. If everybody was as wealthy as the present-day American upper-middle class, but a tiny minority were multi-billionaires, the society would be highly unequal, but so what?

What’s more, Chile is one of the safest, least corrupt, and most exciting places in Latin America… hardly a basket case. The fact that Pinochet was horrid does not magically absolve Allende of his own crimes, such as the mass expropriations, incarcerations, and murders that took place in the name of a socialist revolution.

And what was the first response to my little diatribe? Why, an angry fellow YouTuber declared my statement to be ‘bullshit’ and proceeded to lecture me by stating notions as though they were historical fact. To their credit, another user got me to examine my facts and realise I’d spoken unfairly of Allende, since the ‘incarcerations and murders’ were happening in Peru, not Chile. A big and daft mistake, but we live and learn. To the angry response on inequality, then!

that is bullshit. income inequality is a symptom of greater economic and social troubles. there has never been a single instance of high income inequality signalling progress or prosperity, either in history or modern times

Be warned, my response did not take issue with the flawed history in the quote above, but rather just went for the biggest cause of inequality expansion that can be considered bad, inflation. I think almost everybody likely to read this article will agree that inflation is undesirable. I then moved into conceptualising the reality of a stateless socialism that could theoretically sustain itself without just mutating into stateless capitalism.

The only economic ailment I can think of that has exacerbated income inequality is inflation, and since past socialist regimes like the USSR, and present-day ones like Venezuela and Zimbabwe are enjoying the highest rates of inflation… oops. Inequality based on choice seems better to me than inequality which is mandated by law, which is what happens in Feudalism, Corporatism and state Socialism.

Since stateless socialism has never been tried and in principle suffers from the same two economic problems as the statist kind (the ‘knowledge’ and ‘economic calculation’ problems) I’m lost as to how, let alone why, inequality itself should be targeted for demolition without demolishing civil society along with it.

To paraphrase Friedrich Hayek, there is a world of difference between treating others equally and trying to make them all equal.

Dunno if you have cottoned on but equal means the same. So everybody should live in identical homes, wear identical clothes, attend identical schools… you see, you haven’t even established what is to be at the heart of an economic system predicated on common property and direct democracy.

In the pseudo-free(ish)-market capitalism of today your desires are at the heart of everything, as the consumer, and thus the trades you partake in are the Ur economic activity, ironically, not the production that creates the goods and services you consume.

Once production is mandated as the centre of economic activity, which it is when economic planning is introduced, then how do you establish where there is demand for what, and in what quantities? Presumably the orkers in the co-ops will decide what they produce themselves, right? But if that’s the case, they’ll produce only what they want / need, and te quantity of trade and depth of the division of labour will vastly decrease from its present-day level.

Sorry if I’m being technical to a fault, but I honestly believe the things I’m saying and I’m saying them as a result of 7 years’ hard work and study.

Things get a bit technical in the last few paragraphs because I’m trying to explain the ways in which healthy economic activity stems from human desire, and while I recognise that human desire would still be at the centre of a stateless socialism, the economic process in place to meet needs and wants would work backwards, placing production above trade and so annihilating sound economic calculation altogether. Suffice it to say that I don’t want to be conscripted into such a society. After all, in the long term, if you reverse the expansion of the division of labour, which ass-backwards economics must inevitably do if unsatisfied wants are the cause of economic activity, since the workers’ own wants will dictate what those workers do, thus breaking down the vast division of labour through supply chains and across continents and oceans that at the moment is bringing us closer together.